“Where can I bank?”  “I like having my credit card, auto loan

and savings all at the same institution.”

Don’t keep your money where you owe money. This includes your car loan and your credit card. “Can’t I just have a credit card linked to my bank account?”  No. For your piece of mind, no.

It’s like the facts are covered in clouds, all hazy and buried from view.  The banks offer incentives for tying together different account types because they want easy access to your money if something goes wrong with the loan, credit card, line of credit or mortgage you may have with them. Your finances may look great today but its best to prevent potential problems in the future. If you look, there is a clause in the fine print that allows the bank to take your account funds if you fall behind with any of your payments to them.

The PROBLEM is – if you are financially on the edge and just making your monthly payments when something happens to cause you to fall behind, that helpful institution may just help themselves. In most cases they have a right to offset your debt with your cash. Even if they make a mistake and you eventually get it corrected, you will be without those funds for at least 30 days.

What kind of problems could happen?

  • You could be laid off
  • You could become ill
  • Your spouse could become ill
  • You could have cut backs
  • You could lose your job entirely
  • You could overspend
  • Your medical expenses could increase
  • You may have unexpected auto repairs
  • You may have unexpected home repairs
  • You may lose your investments

The only certain way to protect yourself from this happening is to keep your cash (checking and savings) accounts in a different institution from the bank that has your auto loan, credit card, credit equity line, and any other obligations you’ve incurred. Banks don’t care about you. They aren’t people, they are institutions. For additional bank tips see this article.

[See also the article warning of Wells Fargo and Wachovia’s account freezing practices.]